Is it Safe to Make Auto Payments on Your Utility Bills
As consumers increasingly use electronic payments, utility companies are making it easier and more convenient for their customers to pay their bills. After all, they want their money.
Most utility companies offer several payment methods: from a traditional check to automated bank withdrawals, customers can choose how they want to pay their electricity and gas bills. You often can pay by phone, by mail, in person or make online payments through your account with the utility. The easiest and most convenient way to pay is probably auto payment.
When it comes to personal finances, there isn’t single right way to pay your bills. With electronic payments and options like auto payment, utilities offer their customers greater payment flexibility. You have the choice to pick a method that suits your needs and that you're comfortable with. The increased convenience and security of electronic transactions often lead to the next step to fully automate your payments.
When your monthly utility bill arrives, it tells you the amount due and shows you the payment options you have. Most utility companies offer a wide selection of payment options and methods. While you can still make cash payments or pay by check, there are many quick and easy ways to pay from home or on the go.
Most utilities have online accounts for their customers where they can view everything from their detailed bill to their electricity and gas usage. Once you’ve registered your account with your utility you can save your payment information and pay from your bank account, credit card or debit card. From there, you can make monthly one-time payments, schedule recurring payments on your own or enroll with auto payments. Some utilities also let you make one-time online payments without creating an account.
What Are Auto Payments?
Auto payments are an easy way to pay your recurring bills. Many companies offer automated payments to their clients who are under a contract or agreement that requires regular payments. This can be your phone bill, your mortgage payments or your credit card payments. You can also set it up with many utility companies.
When you enroll with AutoPay, you set it up once and the utility will withdraw all following payments until you manually stop it or until a set date. This way you don’t have to worry about them in the future. This is especially helpful to avoid late fees and other charges, if you tend to forget about your bills or if you simply want to save time. Automatic payment services are usually free of charge.
How Auto Payments Work
Most utilities make it easy to set up automated payments through your online customer account. If you have already saved your bank or credit card information, you can simply activate the function. If not, you can link your bank account or enter your credit or debit card information to set it up.
When you enroll in AutoPay, your payment will automatically be deducted from the bank account, debit or credit card you provided. Many utilities let you pick your preferred payment date. You will still receive a bill, on paper or electronically, with the amount due and the due date.
Payments are typically withdrawn about two to three days before the bill due date and you get notified by email and/or text message a few days before they withdraw the amount. Some companies will also let you know when the payment was received.
Payment and Account Security
Automated transactions with a trusted organization such as your phone company or your utility company are secure and meet bank-level standards.
Electronic payments are typically processed by a third party payment processor, who also stores your payment information in your online ‘Wallet’ function. The utility company should disclose the name of the processor. You can look up the name of the payment processor and research their security standards.
Most likely, your utility will use a company for payment processing, which is Payment Card Industry Data Security Standard (PCI DSS) Level 1 compliant and certified. The PCI DSS standard includes requirements for security management, policies, procedures, network architecture, software design and other critical protective measures. Level 1 is the highest level attainable.
Auto Payment Risks
As with any online transaction there’s the risk of data breaches, virus attacks, unauthorized access or that your customer account gets hacked. This risk isn’t unique to auto payment and can affect any other payment method using online transactions. Make sure your account is safe by using a strong password and check your bank or credit card statements regularly for correctness. Be careful using your online account and take the proper measures just as you would with online banking. Make sure that your payment information is stored encrypted.
A possible risk with auto payments is that your bank account has not enough funds at the time the withdrawal hits your account. In this case, depending on your bank, you may have to pay an overdraft fee, which is often around $35. At the same time, the payment processor may charge you fee for insufficient funds for another $35. On top of that, you may also have to pay a late fee if you set the auto payment too close to the due date of your bill.
Another risk is usage based billing, which makes it hard to predict the exact amount of your upcoming bill. Even though you get several notifications ahead of time, your current bill can be significantly higher than your last. Some utilities help you with this issue by billing you the same amount every month, by averaging your 12 most recent bills. This is sometimes called budget billing.
To avoid overdraft fees, you should make sure your bank account is funded at the time of the scheduled payment. You can also use a credit card for your auto payments. Paying with a credit card also makes it easier to dispute an erroneous charge in case the utility charges you an incorrect amount or if the bill is incorrect. Keep in mind, that payment processors often charge a transaction fee if you pay by credit card.
Regardless of what method of payment you choose, it can be helpful to create online accounts for your utilities to be able to pay your bills at your convenience. Auto payments makes bill paying easy while you can easily track your payments.